Results are in for Wall Street banks, and it is a mixed bag this year. Goldman Sachs surged ahead to retake the number one equities spot on Wall Street, with equities trading revenue triple expectations – while competitors Morgan Stanley and JP Morgan struggled to keep up with both equities and fixed income revenues flatlining. Citi and Bank of America fared better with trading revenues also jumping, but 2023 was certainly the “year of execution” for Goldman.
It was certainly a better start to the year for Goldman Sachs than 2023. This time last year saw the announcement of the bank’s biggest cull since the 2008 financial crisis, with over 3,000 staff cut in a drastic bid to cut costs following the investment banking deal drought that put so much of Wall Street under pressure.
Fast forward 12 months, and this January things are looking somewhat different. In Q4 the bank saw its equities revenues increase 26% year on year to US$2.61 billion (compared to a 24% drop in fixed income revenues), substantially higher than analysts had predicted and well over US$1 billion ahead of its nearest rival, Morgan Stanley.
The equities jump, according to Goldman, was due to significantly higher net revenues in equities intermediation (reflecting significantly higher net revenues in derivatives) and higher net revenues in equities financing (reflecting higher net revenues from prime financing). Equities was the strongest-performing sector in the Global Banking & Markets division, which overall saw revenues drop 3% on Q4 2022 due to poor performances for FICC and investment banking. In total, however, Goldman Sachs saw a 36% year on year increase in trading revenue.
“This was a year of execution for Goldman Sachs,” said Goldman CEO David Solomon. “With everything we achieved in 2023 coupled with our clear and simplified strategy, we have a much stronger platform for 2024.”
The picture for other players was less rosy. At Morgan Stanley, equities and fixed income revenues were flat in Q4 YoY, while FY results saw drops of up to 15% in Q4 YoY (fixed income). Morgan Stanley CEO Ted Pick said the firm was operating against “a mixed market backdrop and a number of headwinds” but nonetheless begins 2024 with “a clear and consistent business strategy”.
At JP Morgan, equities and fixed income revenues were down 8% YoY in Q4, delivering a marginal 3% increase in the firm’s corporate and investment banking division revenues for that period. FY revenues for 2023 were more forgiving, however, with US$148.8 billion reported, up 22% from FY 2022.
JP Morgan CEO Jamie Dimon attributed the “record results” to over-earning on both NII and credit, “but we remain confident in our ability to continue to deliver very healthy returns even after they normalise”. However, Dimon sounded some caution over quantitative tightening, draining more than US$900 billion worth of liquidity from the system annually, as well as ongoing wars in Ukraine and the Middle East.
Competition on the street is always tough but, for now, it appears that despite (or thanks to) last year’s dramatic job cull and cost-cuts, Goldman has once again taken the lead.
Goldman Sachs Q4
At Goldman Sachs, net revenues in equities for Q4 2023 stood at US$2.61 billion, up from US$2.1 billion in Q$ 2022, a 26% increase.
Net revenues in FICC were $2.03 billion, 24% lower than the fourth quarter of 2022, reflecting significantly lower net revenues in FICC intermediation, driven by significantly lower net revenues in interest rate products and currencies and lower net revenues in commodities and credit products, partially offset by higher net revenues in mortgages.
Total trading revenue at the firm for Q4 2023 stood at US$1.5 billion, a 36% increase from US1.1 billion in Q4 2022.
Net revenues for Goldman in Q4 2023 stood at $11.32 billion, 7% higher than the fourth quarter of 2022.
Goldman FY
Net revenues in Equities were $11.55 billion, 5% higher than 2022, due to higher net revenues in Equities financing (reflecting significantly higher net revenues in prime financing), partially offset by slightly lower net revenues in Equities intermediation (reflecting lower net revenues in cash products).
Net revenues in FICC were $12.06 billion, 18% lower than a strong 2022, reflecting significantly lower net revenues in FICC intermediation, driven by significantly lower net revenues in currencies and commodities and slightly lower net revenues in interest rate products, partially offset by significantly higher net revenues in mortgages and higher net revenues in credit products.
Net revenues in Global Banking & Markets were $30 billion for 2023, 8% lower than a strong 2022.
Total net revenues for the year were $46.25 billion for 2023, 2% lower compared with 2022, reflecting lower net revenues in Global Banking & Markets, largely offset by higher net revenues in Platform Solutions and Asset & Wealth Management.
Morgan Stanley Q4
Morgan Stanley saw its total equities turnover for Q4 2023 YoY remain largely unchanged, standing at US$2.2 billion in both quarters.
Fixed Income net revenues were essentially unchanged versus a year ago reflecting higher revenues in commodities driven by improved market conditions and increased client activity partially offset by lower results in credit products – US$1.4 billion to US$1.4 billion.
The firm’s total trading revenues (institutional securities) for Q4 2023 stood at US$3.3 billion, a 10% increase YoY from US$3 billion.
The firm’s total revenues for Q4 2023 stood at US$12.9 billion, up from US$12.7 billion in Q4 2022, a 1.6% increase YoY.
Morgan Stanley FY
For the full year, Morgan Stanley saw equity revenues stand at US$10 billion in 2023 against US$10.8 billion in 2022, down 7% YoY, primarily thanks to lower client activity and increased funding and liquidity costs compared to a year ago.
Fixed Income net revenues were down 15% YoY. Fixed Income net revenues decreased from a strong prior year, primarily driven by declines in foreign exchange and commodities on less favourable market conditions and lower client activity.
Institutional Securities reported net revenues of $23.1 billion in FY 2023 compared with $24.4 billion a year ago, a 5% decrease.
Full year net revenues at the firm were US$54.1 billion compared with US$53.7 billion a year ago, a 0.7% increase.
JP Morgan Q4
Equity Markets revenue was US$1.8 billion in Q4 2023, down 8% YoY, driven by lower revenue in derivatives and cash.
Fixed income markets revenue was US$4 billion, up 8% YoY, driven by higher revenue in the securitised products group, partially offset by lower revenue in rates.
Trading revenue (corporate and investment banking) increased 3% from US$10.6 billion Q4 2022 to US$11 billion in Q4 2023.
Total net revenues at the firm stood at US$39.9 billion, up 12% from US$35.6 billion in Q4 2022.
JP Morgan FY
Full year net revenue at JP Morgan stood at US$148.8 billion, up 22% from FY 2022.
Citi Q4
Total trading revenue at Citi was US$525 million in Q4 2022, and US$669 million in Q4 2023, a 27% increase.
Total revenues at the firm were US$949 million, up from US$778 million, a 22% increase.
Citi FY
Total trading revenue in 2022 at Citi was US$2.51 billion, and US$2.54 billion in 2023, a 1% increase.
Total revenues at Citi stood at US$5.4 billion in 2022, dropping to US$4.6 billion in 2023, a 15% decrease.
Bank of America Q4
Equities revenue increased 13% to US$1.5 billion from $1.4bn, driven by improved trading performance in derivatives.
FICC revenue decreased 4% to US$2.1 billion, driven by weaker trading in rates and credit, partially offset by improved trading in mortgages and municipals.
Sales and trading revenue of $3.6 billion increased 3% from 4Q22 ($3.5bn).
The firm’s total revenues stood at US$22 billion in Q4 2023 against US$22.5 billion in Q4 2022, a 2% drop.
Bank of America FY
Total revenue for the full year at Bank of America stood at US$98.6 billion in 2023 against US$95 billion in 2022, a 3.8% increase.
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